How
The World's Largest Supplier Of Investment Advisory Services Uses
Barter

This is the
third in a series of candid interviews "Direct From The Street"
that we are publishing in 1996. The prominent traders we talk to are
actively and seriously using barter in their company's day-to-day
operations. We expect they will be shooting straight from the hiptelling
it like it is. BarterNews looks forward to sharing their insights,
opinions, attitudes and experiences with you.

Select
Information Exchange (S.I.E.) is the largest purveyor of investment
advisory services in the world. George Wein started the multi-million
dollar-a-year business on his kitchen table 31 years ago.

Today, S.I.E.
represents over 500 different advisory newsletters, and advertises
their availability heavily in the financial press.

Wein left
E.F. Hutton after six years to start S.I.E. when he was 29,
having previously attended New York University and Columbia
University's business school, before working for Equitable and
Penn Life insurance companies.

Many of
our readers have seen S.I.E's ubiquitous advertisementsfull
page spreads in the Wall Street Journal and Investor's Business
Daily, in addition to 2-page ads in major business publications.
S.I.E. also advertises regularly in scores of postcard decks,
and hits the mail monthly with another half-million direct mail
pieces.

From the
beginning Wein has been an active trader. Over the last decade
he's confined his bartering efforts, working with a dozen or
so trade exchanges.

Currently
he's a member of seven exchanges, but Wein says he's always
amenable to working with progressive exchanges that can bring
him new business.

Wein:
Our product is bingo card and display advertising. We also barter
the mailing lists (of prospects) of financial investors.

BarterNews:
What's bingo card advertising?

Wein:
It's a bingo-type postcard with 40 to 50 advertisers, which we place
in some 80 postcard decks every month. The combined monthly circulation
of these decks is over 8 million.

There's
about 1,000 different card decks published today, but we focus our
efforts in three areas: financially-oriented decks, business card
decks and computer owners.

We
charge the advertiser who wants to use our bingo card service 45¢
per inquiry. And we'll trade that out, taking trade dollars as payment,
or in some cases the advertiser's product or service on a direct trade
basis.

We
represent some other print media, because we acquire advertising space
in selected publications, where we'll trade display space. And we
also trade our financial lists and sales leads to the financial community
on barter. (People who would buy these lists would be stock brokers
or insurance people looking for sales leads with phone numbers.)

BarterNews:
Do you find that you do more trading on a direct basis with various
principals and parties, or more through trade exchanges?

Wein:
We don't usually go out of our way to make barter arrangements with
our regular customers, since they represent the cash side of our business.
Our barter business is done through trade exchanges. And we're a member
of seven different exchanges because of the new business they bring
us.

BarterNews:
How were you introduced to barter?

Wein:
I had joined Business Exchange International (BXI) in California,
but I was disappointed because they just didn't have much here on
the east coast.

Then
a few years later Dan Weston called me, he was beginning a franchise
in New York City for BXI, and I became his first client. He had that
area for five or six years and then he started another company, Central
Corporate Reporting Service, which was an investor's relations firm.

I
remember this because they went public the exact same day BXI went
public in the early '80s, and they even raised the same amount of
money$3 million I believe.

BarterNews:
What's the dollar amount of your average trade?

Wein:
A few hundred dollars. Although we've had some biggies, like the $50,000
trade with a collection agency. They obtained mailing lists from us
for different areas of the country where they were opening up new
offices. We were paid with trade dollars from three different exchanges.

Another
big one was with a publicly traded corporationa stamp collecting
company. They were looking for financial sales leads, and they also
paid us (approximately $30,000) in trade dollars.

BarterNews:
Where do you spend your trade dollars?

Wein:
Advertising is one desirable area, because we advertise heavily
in the financial press. And on occasion trade exchanges will have
a financial magazine as a client. Whenever possible, we'll take two
page spreads. That can gobble up $7,000 to $15,000 for a single placement.

Second
to advertising would be printing. Usually smaller jobs for internal
operations. These would be runs of 5,000 to 10,000 pieces for ourselves
or publishers we represent.

We
haven't found a printer who would accept 100% trade on our big print
runs of 350,000 to 500,000 pieces, normally it's part-cash part-trade
on these bigger deals.

BarterNews:
Have you ever worked with any corporate barter companies for media?

Wein:
I'm not sure what you mean by corporate barter companies. We currently
work with BPTX, BXI, Barter Advantage, National Commerce Exchange,
American Barter Exchange, ITEX and Global Trade.

BarterNews:
I was referring to the corporate barter companies which normally
specialize in media. They're larger companies like our cover advertisers
in BarterNews.

Wein:
No, I've never worked with any of them. That's interesting that they
have media, I'll have to investigate more into this end of the business.

BarterNews:
Do you trade at all with your regular vendors?

Wein:
I've had a few arrangements that are open ended accounts, such as
messenger services. But I haven't done much of this type of trading.

BarterNews:
What's the biggest change you've seen in your 22 years of barter?

Wein:
There's more trade exchanges around today. They're bigger, more
professional, and a lot more truthful than when I started. Of course
there are more goods and services available as a result, but I was
always amazed at the number of things I could get, even years ago.

BarterNews:
What changes, if any, would you like to see within the trade exchanges
you're working with?

Wein:
I'd like to see more cooperation among them. Incidentally, that's
another change I've seen over the years.

But
they're still hotly competitive. I'd like to see less competition
and more cooperation. I think they'd benefit more, as well as their
clients.

If
this were to occur I'd join more exchanges. Because each trade exchange
is an avenue for additional sales-business I normally wouldn't get
on my own.

So
if the trade dollars were more uniformly valuable I'd simply join
more firms, since I'd have more sales people selling my services and
products.

I
think such cooperation, which transposes into greater spendability,
would give the industry a real "shot in the arm."

BarterNews:
Any other ideas on what would increase trade?

Wein:
Some type of insurance for the trade dollar itself would be of significant
help. In other words, if the client of a trade exchange could be assured
that the trade dollars earned would always have spendability within
the industry, even if the exchange they belonged to went out of business,
that would be a major step. Hopefully, it'll happen someday. I think
everyone would profit from it.

BarterNews:
So the most valuable aspect of barter, for you, is additional
sales?

Wein:
Yes. There are two values that barter, through trade exchanges, brings
to me. One is that each exchange has its own group of "hot"
prospects, with trade dollars they want to spend. Every one of those
clients, therefore, is a potential buyer of my service.

Second,
they have a sales force that, hopefully, contacts the client base
and informs them of my services. So the more exchanges I join, the
more overall trade dollars I'll earn.

BarterNews:
The trade exchanges you mentioned are quite regional. Do you work
with trade exchanges out of your area?

Wein:
BPTX is out of Massachusetts, se veral hundred miles away. That started
when one of my children was attending the University of Vermont, and
I thought I could use the trade there.

Their
trade dollars, however, are of value to me despite the fact that they're
out of state, because they have some excellent printing services.
So an exchange can be located anywhere, really.

BarterNews:
But you aren't working with any exchanges outside the east coast?

Wein:
There's definitely an advantage to working with ones in close proximity.
But I'd join outside firms if they were big and it made sense for
me to do so.

BarterNews:
Do you ever trade for items to retrade or resell?

Wein:
Through my bingo postcard promotions I've often done direct trades
with advertisers who will pay me with their product. These are items
I couldn't possibly use myself, so I trade the stuff into the trade
exchange.

Same
thing with advertising, I may sell mailing lists to a publisher and
take back ad space in their publication. In fact, I do that with several
gambling and lottery magazines.

Overall
I may do 15% to 20% of my barter in this manner. The vast majority
is done through trade exchanges, however.

BarterNews:
What percentage of your overall business is done on trade?

Wein:
We typically do about $70,000 a year in barter out of an annual gross
revenue of $4 million. It's certainly not a large percentagebut
it's fun, and it's business I normally wouldn't get. Plus, I see it
as almost all net dollars to me.

BarterNews:
What do you see as the ultimate upside potential of your trading?

Wein:
You've mentioned areas that I've not explored, such as working with
a corporate barter firm. ITEX has approached me regarding their corporate
barter division, but we haven't consummated anything yet. However,
I do have about $80,000 in advertising space to sell.

BarterNews:
So you could do considerably more than you're now doing?

Wein:
I could, I could.

BarterNews:
How much time do you spend on your bartering activities?

Wein:
Incidentally, you've put your finger on one of the problems with barter,
regarding my firm. I can't give the barter to the sales people who
work for me. They're working for cash.

BarterNews:
How about perks and incentives?

Wein:
I give them many incentives, all on barter-things like restaurants,
Broadway shows, and vacations.

Actually
I use a lot of the barter for the sales force. But they're not interested
in selling for trade dollars, as they do very well selling for actual
dollars.

So
I end up doing the barter deals. And that's a minor problem, in that
I talk with the trade exchange clients and many of the deals are quite
small-under $500. It's time-consuming for me, but I like to do it.

BarterNews:
What advice would you give a newcomer to barter, someone looking to
work with a trade exchange the first time?

Wein:
I'd encourage anyone to get involved in barter, and tell them it is
very helpful in generating sales they'd normally never get on their
own. The sales I've generated, although small in relationship to our
overall sales volume, nevertheless are almost all profit in our case.

When
my company was much smaller barter was more significant for us, but
it's still important enough that I handle it personally. And it represents
$70,000 additional net income for the company that I wouldn't want
to part with.

BarterNews:
When you consider "signing on" with a new trade exchange,
how do you determine if they're a good one to work with?

Wein:
I normally give them a list of items I'm seeking, ones a good exchange
would have. If they don't have anything I need I wouldn't join.

But
if they have printers, restaurants, copywriters, et cetera, then I'd
ask for several referrals among those vendorsand if they're
"real," I'd join.

BarterNews:
What's the reputation of barter within your industry?

Wein:
My major business is the investment advisory field, and in that area
they don't know anything about the barter business. They don't trade
at all, to my knowledge.

In
the mailing list field, there's a lot of trading (of lists). But again,
many investment advisory firms will not even sell their customer lists
to anybody, much less a competitor.

However,
they might consider exchanging a list with a competitor! So barter
is used extensively in list exchanging, where valuable customer names
are traded for other valuable customer names.

Also,
as the price for mailing lists goes up, and they have over the years,
there is more of a need to trade. When I started 30 years ago, mailing
lists rented for $15 to $20 per thousand names. Today the low end
of the range is $90 per thousand, and many lists rent for $500 to
$600 per thousand.

The
same names with addresses and phone numbers are sold for, on the low
end, 25¢ per name on up to $5 per name. We can perform on both
ends of the spectrum.

BarterNews:
What is barter's biggest drawback?

Wein:
To me it's the possibility of a barter firm going out of business
and the client being stuck with a lot of unspent trade dollars. Over
the years I've been trading that's happened to me several times, at
least seven or eight times.

As
a result of my experience, the only way I operate is to spend the
trade dollars as I earn them. In this manner I eliminate the possibility
of getting stuck.

BarterNews:
What do you see as the future for barter?

Wein:
I think the future is excellent for barter firms, because they're
providing a valued service for the business community. I have great
faith and belief in the U.S. and its free-market economy.

Those
who have done exceedingly well are the entrepreneurs who have ridden
the economic wave. So as our economy grows, and business increases,
I think the barter firms will do better and better since they provide
a great marketing tool.

As
far as capitalization is concerned, barter is a tremendously exciting
concept. Even though the commercial barter industry is very young,
I've known of several barter firms that have gone public. They're
not all still in existence, but they raised millions of dollars because
the barter financial concept is very enticing!

Furthermore,
over the years I've seen an enormous change in barter's respectability
in the marketplace. The IRS recognizes it now as a legitimate business.

That
means two things in my mind. There's a government authority that recognizes
this industry, and secondly, because of this "legitimacy,"
there's more business people who will view it positively and want
to become involved. They won't view it as some subversive underground
movement anymore.

And
as more people and companies get involved, we'll see a greater number
and amount of available products and serviceswhich means that
those trade dollars will become more valuable, too. Taken together,
the future of barter looks like a "can't miss" situation
to me.